The Story Behind Inflated World Oil Reserves

There's an old joke about lab rats in which the teller says he or she secretly suspects that all lab rats are prone to cancer and so all research about the risk of cancer in humans based on tests in rats is likely useless.

Last week the group released its findings and that joke became a reality. The diet fed to most lab rats is so laced with pesticides, heavy metals, genetically engineered feed and other man-made contaminants that lab rats worldwide are indeed at much higher risk of developing cancer and other diseases and disabilities just from the food they are reared on.

This doesn't necessarily mean that certain substances thought likely to cause cancer in rats and possibly humans now somehow don't. Rather, the study calls into question practically all safety tests which rely on these rodents. And, in fact, it suggests that the dangers of many substances and genetically engineered plants may have been underplayed.

The researchers point out that some studies purporting to demonstrate the safety of genetically engineered foods fed significant amounts of such GE foods to control groups of rats. These rats should not have gotten any GE food in order that their health profile could be compared accurately to those intentionally fed GE food.

And, even if the rats in the control groups don't ingest the chemical or plant being tested--as is the case in a proper study--they still get sick at abnormally high rates due to their diet. That can make substances being tested appear safer than they truly are because it is more difficult to sort out which effects in the test group are due to the substance or plant being tested.

The butcher's thumb on the scale has long been a metaphor for skewing results of laboratory tests and public surveys. And today, there are so many opportunities for "the thumb on the scale." This matters because it is difficult to know what to believe in a world that is so complex that we are obliged to rely on experts for much of our understanding about how the natural and human-built worlds work and interact. Related: Don’t Panic, Nothing Has Really Changed In The Oil Markets

This week we were treated to the good news that the U.S. unemployment rate dipped to a cheery 5.3 percent. But what's called the participation rate--the percentage of working-age people employed in the work force--hit its lowest level since 1977. So, fewer people looking for work in part accounted for the lower unemployment rate. This suggests that there are still a lot of people having difficulty getting work. The all-inclusive U-6 number--composed of those who've given up looking for work (so-called "discouraged workers"), those working part time who want to work full time, and those who've simply disappeared from the unemployment rolls after benefits ran out--that number stands at 10.5 percent.

Changing the definition of what we count without making that change clear to the public is always a promising tactic among those who would like to mislead us. As I have again and again pointed out, the way we count barrels of oil in the world is seriously flawed for two reasons. First, we count a number substances which are not oil. The marketplace is wise to this, for while governments and companies count these non-oil substances as supplies, companies cannot sell them on the world market as oil.

Second, we treat estimates of "resources" of oil which are based on very sketchy evidence as if these resources will be ready and available to humans whenever we need them at the quantities we want and prices we like. This infographic from the otherwise sensible Carnegie Endowment for International Peace claims that humans have access to 24 trillion barrels of "oil" (a word which must now be placed in quotes). We've consumed about 1 trillion so far. That 24 trillion barrels presumably amounts to a 500-year supply.

But the truth is in the fine print. Some 6.5 trillion barrels are labeled as "technically recoverable." This means they are not necessarily deemed "economically recovered." Only a small fraction of such resources will ever be extracted due to cost and logistical constraints. This number includes a substantial amount of oil from oil shale (actually from kerogen) for which there is no known economically viable extraction method. It is instructive that actual worldwide reserves of "oil" from oil shale currently stand at precisely zero. Related: Not Deterred By Huge Risks, Shell Opts For Megaprojects

Only Estonia has made consistent use of oil shale by simply burning its abundant deposits directly to make electricity. Efforts to extract unsubsidized liquid fuels from oil shale have so far proven elusive.

The 24 trillion barrel number is even sketchier as it is called "oil in place." This includes hasty and poorly supported estimates for which there is typically no drilling data at all (except for the tiny fraction--1.6 trillion--that represents known "reserves," a much more rigorously supported number).

Only an even tinier fraction of the remaining oil in place will ever be produced. To date about 35 percent of all exploited oil in place has been extracted. That was the easy stuff. The number falls precipitously to 5 to 10 percent for unconventional oil such as tar sands and tight oil for which there are known economically viable extraction technologies.

Everything else beyond that is just fantasy. We should remember that for more than a century, people have been trying to figure out how to get "oil" economically out of so-called oil shale of which there are huge deposits in the American West. We are still waiting for a breakthrough.

Moreover, none of these estimates tell us at what RATE we might get these resources out. And as I have pointed out again and again, rate is the most important number. You may inherit a million dollars. But if the trust controlling those dollars limits you to withdrawals of $500 a month, you will never live like a millionaire. We are all living like "oil millionaires" in the modern age because of the rate at which we've been able to withdraw oil from the ground. There is no guarantee that this rate can climb continuously, and, in fact, the growth of the rate of extraction has slowed dramatically in the last decade as we now seek out more difficult-to-get sources of oil.

The numbers that come our way are calculated and disseminated by people who have an agenda. It may be to be as objective as they can be given the constraints under which they labor. It may be to satisfy the views of financial supporters of a think tank or university research laboratory. The information may be intentionally skewed so as to deceive us (even if there are no outright lies). Or the information may simply be mistaken. Related: This Week In Energy: Top 4 Reasons Oil Prices Are Heading Back Down

Nassim Nicholas Taleb, author of several bestselling books on risk, says that a good rule of thumb is as follows: If the numbers come from somebody wearing a tie (Wall Street economist or analyst, industry public relations department, captive think tank academic and so on), you ought to be very skeptical. By design messages from these people are intended to move markets, move merchandise and/or move public policy and are not a comment on the state of the physical universe.

If, however, the person telling you the numbers is not wearing a tie (a physicist or chemist, for instance), then it is more likely that you are getting numbers based on the physical realities of the universe that are open to inspection and verification by anyone with the necessary skills and equipment.

(With women, who don't typically wear ties, but are now in positions to give us both useful and skewed numbers, we need to include warnings for numbers which come from women in business suits versus those more informally dressed, especially if they come from the hard sciences.)

It's not that we should never accept numbers and use them to guide our work and life. It's that we should always be on the lookout for the not-so-hidden agenda behind those numbers and make our own determinations and adjustments as necessary

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I think you may be giving "scientists" a little too much credit, because the "man-made global warming" (now just called "climate change") fraud exposed so many as partisan/ideological hacks that you have to wonder if their views on other things are similarly tainted. And I am a PhD scientist (no, my name is not Bob Smith ;) ) with the ability to see fraud when it is being perpetrated.